25 September 2014

The founder of the EU's agricultural policy renounces it

Sicco Mansholt was a key player in Dutch and EU (EEC at the time) agricultural policy. I visited an exhibit on his career a few weeks ago that described how his initial enthusiasm for industrial agriculture and free trade turned to horror as overproduction wasted money and resources and damaged the environment.

In his original (1950) proposal for the EU's Common Agricultural Policy, note that he wanted to regulate (guarantee) prices to overcome farmers' resistance to free trade within the EU.

Years later, he came to regret that "temporary" price subsidies had become permanent and that taxes had never materialized to offset subsidies. He also regretted the resulting overproduction -- leading to "butter mountains," distorted markets and environmental degradation. The 1972 report, Limits to Growth, had a profound impact on him, and he drafted a new memo on sustainability that focused on growing food (incl. "unprofitable" crops that served different needs), replacing consumption of goods with human services, reducing capital churn, and tackling pollution. (Note his caveat "supposing stable world population," which was 3.85 billion in 1972.):

These goals make sense from a sustainability prospective, but there has been no "progress" on population, consumption or capital. Food production has risen, but only to feed people (hunger is still a problem) and non-food crops have increase agriculture's footprint. Some progress has been made on local pollution, but global pollution (carbon, much of which is linked to people, industrial ag, and consumption) has turned into a much bigger threat.

Bottom Line: Subsidies encourage overproduction and overconsumption, and they have a way of persisting far beyond any initial justification (cf. ethanol, renewables, freeways, ag irrigation, etc.). Mansholt had the opportunity to see his plans abused for private profits but the opportunity (and honesty) to denounce them. It would have been better to allow markets evolve at their own pace.